Tech Shares Gain; Treasury Yields Decline: Markets Wrap

(Bloomberg) -- Technology shares rose as investors focused on growth stocks as nervousness about an acceleration in future U.S. interest-rate increases weighed on global markets.

The benchmark S&P 500 Index fluctuated, while the tech-heavy Nasdaq 100 jumped around 1%, with Apple and Nvidia leading the gains. The Bloomberg Dollar Spot Index rose for a fifth day, the longest winning streak since March 2020. Yields on longer maturity Treasuries retreated after spiking Wednesday.

“Tech doing well is an acknowledgment that GDP growth and strong economic growth is here,” said Mark Stoeckle, chief executive officer at Adams Funds. “It’s outweighing the inflation worries.”

Federal Reserve Chair Jerome Powell acknowledged the risks of inflation and said policymakers had begun a discussion about scaling back bond purchases. Policy makers’ dot plot showed they anticipate two rate increases by the end of 2023, a faster-than-expected pace of tightening. This marked a turning point in the Fed’s communication to global markets, which had so far been ultra-dovish.

U.S. Stocks, Bonds Are Moving Together Like It’s the ‘90s: Chart

While Powell downplayed the risk of any immediate rate increase, some investors interpreted his comments as preparing markets for a hawkish tilt and an eventual tapering. His remarks followed the Fed’s latest projections, which included upward revisions to its outlook for inflation and interest rates.

In equities, CureVac NV plunged as much as 61% in German trading after a study found that its Covid-19 vaccine fell short of targets. The findings, though preliminary, throw the future of the vaccine into question as wealthy nations around the world move swiftly to inoculate their populations with shots already available.

Copper fell in London to the lowest in two months. The rally in metals has stalled in recent weeks and copper has retreated from last month’s record as concerns about cost pressures spurred expectations stimulus that had been supporting the global recovery would be scaled back. Copper producer Freeport-McMoran and Newmont slumped.

For more market commentary, follow the MLIV blog.

Here are some key events to watch this week:

• U.S. Treasury Secretary Janet Yellen testifies before a House panel Thursday on the federal budget
• Rate decisions come from Switzerland and Norway on Thursday
• The Bank of Japan’s monetary policy decision is on Friday

These are some of the main moves in markets:

Stocks

• The S&P 500 was little changed as of 10:55 a.m. New York time
• The Nasdaq 100 rose 0.9%
• The Dow Jones Industrial Average fell 0.5%, falling for the fourth straight day, the longest losing streak since Jan. 27
• The Stoxx Europe 600 fell 0.1%, more than any closing loss since June 3
• The MSCI World index fell 0.4%, more than any closing loss since June 3

Currencies

• The Bloomberg Dollar Spot Index rose 0.4%, climbing for the fifth straight day, the longest winning streak since March 23, 2020
• The euro fell 0.5% to the lowest since April 12
• The British pound fell 0.3% to $1.3950
• The Japanese yen surged 0.4%, more than any closing gain since June 4

Bonds

• The yield on 10-year Treasuries declined four basis points to 1.53%
• Germany’s 10-year yield advanced six basis points, more than any closing gain since March 3
• Britain’s 10-year yield advanced six basis points, more than any closing gain since March 12

Commodities

• West Texas Intermediate crude fell 0.5% to $71.82 a barrel
• Gold futures fell 4.3%, the most in about 10 months

©2021 Bloomberg L.P.